Bitcoin advanced late Wednesday after United States President Joe Biden signed an executive order requiring U.S. government agencies to evaluate the benefits and hazards of establishing a central bank digital currency, as well as other cryptocurrency concerns.
The presidential directive has the potential to increase the usage of virtual currencies in the United States' financial system.
Biden's mandate will ask the Treasury Department, the Commerce Department, and other key departments to submit reports on "the future of money" and the role that cryptocurrencies will play.
"It is doubly vital that we have a regulatory framework in place for digital assets that opposes illegal money," Michael Pierson, managing partner at law firm FisherBroyles, said, referring to the new sanctions system imposed as a result of the war in Ukraine.
To address the growing threat of ransomware and other forms of cybercrime, the White House said last year that it was looking into broad supervision of the cryptocurrency sector, including an executive order.
In mid-day trading, bitcoin gained 9.2% to $42,280, its highest level since February 28, while smaller peer ether, the coin linked to the Ethereum blockchain network, rose 6.3% to $2,741, matching its best day of the month.
"Today's decision will help the U.S. establish itself as a leader in cryptocurrency for years to come," said Hany Rashwan, chief executive officer and co-founder of 21Shares, the world's largest issuer of crypto exchange traded products.
The price of U.S. exchange traded funds (ETFs) that track bitcoin futures, which were approved by regulators late last year, also increased.
In early trading, ProShares Bitcoin Strategy ETF and Valkyrie Bitcoin Strategy ETF both gained 9.8% and 10.2%, respectively.
Meanwhile, privacy-related currencies such as Zcash and Monero surged late Tuesday after Treasury Secretary Janet Yellen appeared to overreact to the EO by issuing an early response.
Crypto miners in the United States advanced as well, acting as a proxy for digital coin movements. Riot Blockchain increased by 11.9%, Marathon Digital Holdings increased by 14.6%, and cryptocurrency exchange Coinbase Global Inc rose by 9.4%.
Biden's crypto EO, which comes at a time when markets are roiled by the conflict between Russia and Ukraine, and which has spilled over into crypto, has been mostly praised by industry players who have been wary of the government's efforts to develop a regulatory framework for the expanding sector.
In the meantime, prominent financial organizations such as J.P. Morgan, Goldman Sachs, and asset management behemoth Blackrock are all putting their stamp on cryptocurrency.
The overall stakes are raised as a result of Biden's crypto EO, as well as a flood of ordinary investors wanting to profit from digital currency.
